The second driver alluded to previously is something that needs greater explanation. Since 1960 we have observed that the cost of computer processing has gone down by a factor of about one thousand every twenty years. This observation was predicted many years ago and is likely to hold correct well into this millennium, as I described earlier. Conversely, the cost of human endeavour has increased over that same period by some magnitude (don’t we all expect a pay rise every year?) and this has resulted in a shift of some 100,000 times in the ratio between the cost of computing and that of human resources over the time period since England last won a major football tournament (in 1966).
So, the race is on to replace human activity, including intelligence, which is not so easy, with automation. Hence the replacement of marketing staff with computer systems that can not only automate the creation of direct mail but also supposedly make intelligent decisions as to what should be marketed to whom.
So, marketing as we know it, and as we see it today, is set to make a remarkable change because of the competitive environment we are in and the sheer expense of any task that needs human intervention.
It is notable that as marketing becomes more important, we actually find fewer people doing it, and this drives even harder this tremendous need to automate. We also find that the nature of a marketing ‘campaign’ is changing rapidly. Not so far back, our big mail-order companies used to run four major campaigns per year – one each in winter, spring, summer and autumn. The catalogues that were sent each had hundreds of high-quality, glossy pages and were frightfully expensive to create, print and distribute. Today, whilst these big catalogues often remain, they are supplemented with other, more directed catalogues that are much smaller and cheaper to manage. This direction comes in two ways. Firstly, they are sent or directed to smaller segments of the customer base – those that are deemed more likely to buy; and secondly, the catalogue contents are subject-oriented. They are related and designed to hold the interest of specific ‘profiles’, or types of people.
Perhaps the major change, however, is simply the number of campaigns that we might witness in the future, their recursive nature and just how they are delivered to us. As we saw above, years ago, there tended to be fewer but larger campaigns which were sent uniformly to all customers without discrimination and, of course, with very poor response rates. Even today, a run-of-the-mill direct marketing campaign for a new product may expect to achieve one to three percent response rate (one to three people per hundred sent the mailing might respond with either a product purchase or further enquiry).
As we move into the future, response rates of single digits will not be acceptable, so the race is on for higher productivity.